Prívate Lending for New Deals and New Construction (ADU)

[Ray Garcia]

Does anyone have any reputable private lenders that you have worked with that you recommend working with? 

I find myself attempting to scale my portfolio to a few more cash flowing properties, in additional to a new construction (ADU) on one of my current properties.

Any advice or guidance is appreciated as I find myself in a learning curve in the arena of private lending.

[Alex Breshears]

Hi Ray! Well you are in luck! BiggerPockets has a new book about private lending. While it is a how to manual on how to lend, it also works for active investors as a play book to recruit private money to your deals.  If you can talk to your network about how you would protect their capital in a deal, what the process looks like, and how much you are going to work to get their capital back - they will flock to you.

Now as far as private lender goes - there is unfortunately a lot of ambiguity about the term right now. Hard money lenders are trying to move into the space calling themselves private lenders. That leaves people like me who lend out their own capital in a tough spot on how to portray to borrowers and potential borrowers that we are indeed in control of our own capital and it is a much more relationship based model than a hard money lender.  There are pros and cons of private lenders and hard money lenders - each is a tool that you need to use for the right job.  If you are after truly private capital, the book is well worth your time!  Building an entire real estate business model around getting capital from private individuals can really help you scale, so think about building relationships versus raising capital.

[Ray Garcia]

Quote from @Alex Breshears:

Hi Ray! Well you are in luck! BiggerPockets has a new book about private lending. While it is a how to manual on how to lend, it also works for active investors as a play book to recruit private money to your deals.  If you can talk to your network about how you would protect their capital in a deal, what the process looks like, and how much you are going to work to get their capital back - they will flock to you.

Now as far as private lender goes - there is unfortunately a lot of ambiguity about the term right now. Hard money lenders are trying to move into the space calling themselves private lenders. That leaves people like me who lend out their own capital in a tough spot on how to portray to borrowers and potential borrowers that we are indeed in control of our own capital and it is a much more relationship based model than a hard money lender.  There are pros and cons of private lenders and hard money lenders - each is a tool that you need to use for the right job.  If you are after truly private capital, the book is well worth your time!  Building an entire real estate business model around getting capital from private individuals can really help you scale, so think about building relationships versus raising capital.

Hello Alex - 

Thank you for your feedback.

[Kevin Woodard]

 Just like Alex said the line is becoming blurred but you’re best off meeting and becoming acquainted with both. Each will have a strong suit in given the particular situation. 

I am reading the book it’s a good piece of gear, I highly recommend it! 

Last part, I’d be more than happy to talk about what I see with investors and answer any questions you may have.